BusinessPolicyNotes05

BusinessPolicyNotes05 - Chapter 5 Building Competitive...

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Unformatted text preview: Chapter 5 Building Competitive Advantage Through Business-Level Strategy 126 STRATEGIC MANAGEMENT Abell's Framework for Defining the Business Lecture 5 Dr. John Kraft 3 1 ~kb.i~ ~.:_. "'-. ~ \ } 3 2 Opening Case :Samsung Changes its Business Model 3 3 Business-Level Strategy :Oeveloping a firm-specific business model that will allow a company to gain competitive advantage over its rivals in a market or industry Customers' needs Customer groups Distinctive competencies (how customers' need will be satisfied) 3 Strategy in Action :Ryan Air takes control over the sky in Europe. 3 5 127 The Dynamics of Business-Level Strateav :Make a consistent and compatible set of choices concerning: How to differentiate and price the product When and how much to segment the market to maximize demand Where and how to invest capital in order to create value while keeping cost structures viable (for competitive pricing) ~'1l'~~=.,~~7 3 1 Film The Dynamics of Business-Level Strategy Scan:.: ~ c C. W. L !W md ~. R. JonM;, ~ DyfWric:s 3 7 _ P _ __ . ~ 3 The Four Principal Generic Business-Level Strategies 1. Cost Leadership Lowest cost structure vis-a-vis competitors allowing price flexibility & higher profitability 2. Focused Cost Leadership Cost leadership in selected market niches where it has a local or unique cost advantage 3. Differentiation Features important to customers & distinct from competitors that allow premium pricing 4. Focused Differentiation Distinctiveness in selected market niches where it better meets the needs of customers than the broad differentia tors Choosing a Generic Business- Level Strate :Generic strategies All businesses can pursue them regardless of whether they are manufacturing, service, or nonprofit Can be pursued in different kinds of industry environments . Results from a company's consistent choices on product, market, and distinctive competencies 3 3 1 0 Generic Business Models f!I The Value-Creation Frontier Figure 5.6 The Four Principal Generic Stnlt!sliu 1. Cost Leadership 2. Focu.ed Cost Leadership 3. Dillerentilllion 4 . F o e u a d DilIerentiation 3 " 128 Cost Leadership Generic Business-Level Strategies Cost leaders establish a cost structure that allows them to provide goods and services at lower unit costs than competitors. Strategic Choices The cost leader does not try to be the industry innovator. The cost leader positions its products to appeal to the "average" or typical customer. The overriding goal of the cost leader is to increase efficiency and lower its costs relative to industry rivals....
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BusinessPolicyNotes05 - Chapter 5 Building Competitive...

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